Highlights
- Flight Centre Travel Group sets dividend at A$0.11 per share
- High current payout draws sustainability concerns
- Potential for earnings growth anticipated next year
Flight Centre Travel Group Limited (ASX:FLT) has declared a dividend of A$0.11 per share, scheduled for distribution on April 17th. This equates to an annual yield of 3.7% of the stock price, placing it above the average in its industry.
Earnings Coverage and Sustainability
The current high yield, however, may raise questions about its sustainability. Previously, the company distributed a substantial portion of its earnings, constituting 97% of cash flows. This scenario poses a risk where diminished cash flows might necessitate a lower dividend payout.
Encouragingly, forecasts project an EPS growth of 183.8% for the upcoming year. Should the current dividend trends extend, the payout ratio may decline to 25%, aligning more comfortably with sustainability targets.
Historical Dividend Trends
While Flight Centre Travel Group has maintained a long-standing dividend history, it has experienced at least one reduction over the past decade. Since 2015, annual dividends have decreased from A$1.52 to A$0.60, translating to a reduction rate of approximately 8.9% per year. Typically, declining dividends might signal underlying business challenges.
Growth Outlook
Despite recent downward trends, upcoming projections suggest a positive outlook with rising earnings. However, it is prudent to await consistent performance before forming any definitive conclusions regarding sustainable growth.
Considerations for Investors
Ultimately, stable dividends are usually preferred by investors. Other factors should be considered before committing to Flight Centre Travel Group. For a broader perspective, exploring various dividend stocks with promising records may offer valuable insights.
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